Petroleum minister Dharmendra Pradhan says the LNG contracted from the US is very economical and highly profitable for India

New Delhi: Petroleum minister Dharmendra Pradhan on Wednesday said that India is a price-sensitive customer and will seek reasonable rates as its energy demand grows.

This comes in the backdrop of India setting in place a new energy architecture, with the first long-term liquefied natural gas (LNG) US cargo from the Houston-based Cheniere Energy Inc. expected to reach Dabhol terminal in Maharashtra on 31 March.

“We are price sensitive” and “want a reasonable price”, said Pradhan at a press conference here. “It has to be affordable for our consumers.”

With a glut in global LNG supplies; India, the world’s fourth-largest LNG importer has been trying to renegotiate its contracts. It has been successful in inking new deals with Qatar’s RasGas Co. and Exxon Mobil Corp.

Cheniere Energy Inc. has signed a 20-year deal with state-run Gail India Ltd to supply 3.5 million tonnes per annum (mmtpa) of LNG. Of 9 mmtpa of LNG contracted by India from the US, Gail accounts for 5.5 mmtpa.

Indian firms have inked long-term LNG contracts totalling 22 mmtpa and are exploring strategies such as time swap of volumes, destination swaps and contract on free on board basis to reduce the final fuel price. India imported 19 million metric tonnes of LNG in 2016-17.

Apart from the US, new natural gas suppliers such as Mozambique, Tanzania, Egypt, Israel, Canada and Cyprus are expected to enter the LNG market, helping the consumers get better prices.

In response to a Mint’s query about Organization of the Petroleum Exporting Countries (Opec) looking to extend its cooperation with Russia on production cuts, Pradhan said that Opec accounts for only around 40% of the global production.

He went on to add that there is no monopoly with the world opening up. This comes at a time when the US has also emerged as an important global energy exporter.

With India being one of the major consumers of Opec’s production, Pradhan’s pitch for price and terms correction than paying the so-called Asian premium, articulated at Opec’s sixth international seminar in Vienna has gained traction.

“It is a consumer’s market,” Pradhan said, while adding that new producer countries in Latin America and Africa are coming up.

India has been recalibrating its crude sourcing strategy and sourcing heavy crude from Latin America as part of its strategy to become a preferred refining hub.

There have been some concerns with Moody’s Investors Service earlier this month raised its oil price forecast to $45 to $65 per barrel from from $40-$60 per barrel amid Opec-led production cuts and a strong global demand growth.

Pradhan said that India looks at the US as a reliable and long-term energy partner, and added that the country’s future gas requirement will go up given the government’s focus towards a decarbonised economy.

He added that the LNG contracted from the US is “very economical” and “highly profitable for India.”

“It is a very competitive price,” Pradhan said.

Even as gas accounts for around 6.5% of India’s primary energy mix as compared to a a global average of 24%, the National Democratic Alliance government plans to increase its share to 15% by 2030. India’s gas demand is expected to be driven by the fertilizer, power, city gas distribution and steel sectors.

Speaking at the same press conference, Texas governor Gregory Abbott pitched his states’ resources to help India meet its growing energy demands.

India, the biggest emitter of greenhouse gases after the US and China, plans to reduce its carbon footprint by 33-35% from its 2005 levels by 2030, as part of its commitments to the United Nations Framework Convention on Climate Change adopted by 195 countries in Paris in 2015.